Taiwan Semiconductor Manufacturing Company (TSMC) closed the year with a powerful earnings surprise, underscoring how deeply artificial intelligence demand is reshaping the global chip industry.
The company reported a sharp jump in fourth-quarter profit, beating expectations and setting new records as orders for advanced AI processors continue to flood in.
Key Takeaways
TSMC’s Q4 profit surged to a record as AI chip demand remained strong.
The company sees nearly 30% revenue growth in 2026.
U.S. capacity expansion and higher capital spending are accelerating.
The foundry giant said momentum from what it describes as an “AI mega trend” is not slowing. Customer demand remains strong across the supply chain, prompting TSMC to project nearly 30% revenue growth in U.S. dollar terms for 2026. That outlook positions the company as one of the main long-term beneficiaries of the AI buildout powering data centers, cloud computing and next-generation devices.
AI demand lifts profits to new highs
Fourth-quarter net income surged to T$505.7 billion (around $16 billion), marking the seventh straight quarter of double-digit growth and easily topping market forecasts. Management also signaled that the strength is carrying into early 2026, with first-quarter revenue potentially jumping as much as 40% from a year earlier to roughly $35.8 billion.
TSMC’s scale and technological lead have allowed it to pull further ahead of rivals. Its market value now stands near $1.4 trillion, more than double that of South Korea’s Samsung Electronics. The company’s shares climbed more than 50% over the past year, reflecting investor confidence in its central role in AI chip production.
Major clients such as Nvidia and Apple continue to rely on TSMC for cutting-edge manufacturing, meaning rising competition among chip designers ultimately feeds demand for TSMC’s factories.
U.S. expansion accelerates as spending rises
Alongside the earnings surge, TSMC is pushing ahead with an aggressive expansion strategy. The company is accelerating capacity growth both in Taiwan and the United States, particularly in Arizona, where one factory is already operating. Chief executive C.C. Wei confirmed that permits are being sought for a fourth U.S. fab, along with the company’s first advanced packaging facility in the country. Additional land has also been secured, pointing to a much larger manufacturing footprint over time.
Capital expenditure could rise by as much as 37% this year to around $56 billion, with management warning that spending will increase further toward the end of the decade if AI demand continues on its current trajectory. At the same time, Wei struck a cautious tone, stressing that investments must be carefully paced to avoid overextending if market conditions change.
Political and trade considerations are also in focus. U.S. Commerce Secretary Howard Lutnick has indicated that further investment from TSMC is expected, while reports suggest Washington is pressing for even more fabrication plants as part of ongoing trade discussions with Taiwan.
Analysts view the results as an early positive signal for the broader tech earnings season. With chip designers battling for AI dominance, TSMC stands out as the essential manufacturer behind them all, capturing the upside regardless of which brand wins the performance race.
